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Asian IPOs seen to crash 59% by capital raised

But deal numbers pegged to rise.

According to Ernst & Young, there are 78 IPOs expected on Asian exchanges, with proceeds of US $6.4b in Q3 2013.

This would account for 40% of the global number of deals and 26% by capital raised. Deal number is expected to be 26% higher from Q2 2013 but capital raised is expected to fall by 59% from Q2 2013 (62 IPOs, US$15.6b).

Real estate is expected to be the most active sector by deal number and capital raised (11 IPOs raising US$2.1b). Consumer staples (7 IPOs, US$1.5b) and energy (9 IPOs, US$0.9b) sectors are expected to lead by capital raised.

Max Loh, EY’s Asean and Singapore Managing Partner commented: “The ongoing suspension of new listings on mainland China exchanges has affected IPO activity level in Asia. A drop in IPOs in Japan, following a blockbuster Q2, also weighed on total proceeds in Q3.

Activity on other exchanges also softened, reflecting weaker economic and market conditions, though Singapore was one exception, with expected proceeds in Q3 2013 up 39% on Q2 2013 to US$1.7b, on several REIT offerings.”

“Particularly under volatile market conditions, the IPO markets in Asean are expected to improve in the final months of 2013 and 2014 with a growing list of companies planning to conduct IPOs, which should result in more IPO listings from markets such as Thailand, Singapore, Malaysia and Indonesia.

This underscores the importance of IPOs having established earnings records to be able to justify investor support and acceptable pricing,” he added.

Maria Pinelli, EY’s Global Vice-Chair of Strategic Growth Markets said of the overall global IPO activity: “Despite a comparatively quiet third quarter – in line with historical trends of slower activity over the summer months – global IPO activity is expected to lift through the remainder of the year and into 2014.

The uplift in activity will vary from region to region both in terms of timing and pace.

The US market is expected to continue its strong momentum and we expect stronger IPO activity from European exchanges, especially from UK and Germany, as well as from South East Asian exchanges.”

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